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The issues for decision are: (1) Whether petitioners had
sufficient basis in indebtedness under section 1366(d)1 from
which to deduct losses from two wholly owned S corporations; and
(2) whether petitioners were at risk under section 465 for
certain loans made to the two S corporations.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. Petitioners Donald G.
Oren (Mr. Oren) and Beverly J. Oren (Mrs. Oren) resided in
Roseville, Minnesota, at the time they filed their petition.
Petitioners owned stock in several S corporations. Those
corporations performed various functions which together formed
the nexus for petitioners’ trucking business.
Dart Transit Company (Dart) was formed in 1934 by Mr. Oren’s
father and was incorporated in 1938 under Minnesota law. In
1993, 1994, and 1995, Dart held a 48-State authority and operated
throughout the United States and in some provinces in Canada.
During that time period, Dart was in the process of expanding and
positioned itself in the “high service just-in-time” segment of
the truckload carrier industry. Dart offered premium truckload
carrier services to retailers and manufacturers of products such
1Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable years in
issue.
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